D2 Cards Flashcards
Vine Pull Schemes
When production is greater than demand, creating a surplus, governments and then the EU itself paid growers to pull up poor quality vines, especially in southern France, Italy and Spain.
Supply Chain
A network of organizations and activities involved from the creation of a product through to its distribution and sale to the final consumer.
Air Freight
Heavily dependent on weight, due to the additional fuel required. Used in special circumstances since it is expensive such as trade/consumer fair, for very high value wines where deadlines are important.
Road Freight
Used for short distance travels. Very efficient as it takes the wine directly from winery to the point of delivery. However for long distances, it is excessively expensive.
Rail Freight
Cost will vary according to the length of the journey and how goods are loaded. Individual pallets are high costs. Can be reduced by containerisation, goods loaded into standard container which is lifted onto the back of a truck.
Sea Freight
Usually the cheapest method for transferring wine over long distances. Containerisation is essential for deep sea shipment. The downside is it’s slow.
Bulk Transportation
When wine is shipped in barrels. Since wine in tank is lighter than bottles, you can ship more wine. Less fuel is required to transport the same amount of wine. Less attractive option for smaller production wines.
Margin
The project margin is the percentage of sales that has turned into profit.
Exchange Rates
Changes to exchanges rates can impact demand for important wines especially in price sensitive markets.
Options
A key strategy used in currency hedging.
Estates
Estate producer produces wine from its own vineyards, retaining control over the entire process from growing grapes to producing and bottling the wine.
Growers
Some growers do not produce wine which allows for them to focus their efforts on producing the best possible grapes. They won’t have to buy or hiring expensive winery equipment and do not have to market and sell their wine. Cash flows are accelerated since payment is due when the grapes are sold rather than when the wine is made or sold.
Grower-Producers
Some growers produce wine from their grapes but sell it to a merchant to mature and bottle. They lose control over the style of wine.
Merchants
Merchant buys immature wine, mature it and sell it under the merchant’s name. They may blend the wines of different producers prior to bottling.
En Primeur
Method of selling wine before it has been bottled. Purchasers buy the wine while it is still in barrel and it remains in the producer’s cellar until it is ready for bottling.
Co-Operatives
Owned by a group of growers, and produce and sell wines made from grapes grown by their members. Can pool financial resources, meaning they can afford more expensive winemaking equipment and expertise that they could not afford by their own.
Custom Crush Facilities
Grower do not own the facility but pay each time they require its services. No need for growers to own winemaking equipment. Finished wine is returned to the grower who can then market it they like and take the profit.
Virtual Winemakers
Don’t own vineyard land or winemaking facilities. They buy in grapes or juice and may rent facilities in another winery or employ the services of a custom crush facility.
Conglomerates
Large companies who may have interest in various alcoholic products, not just wine.
Free Market
Once a wine has been produced and bottled, producers merchant or co-op has to get it out the end consumer.
HoReCa
Hotels, Restaurants and Cafes/Catering. Otherwise known as on premise.
Distributor
Buys wine from a range of producers and sells it to a range of retailers.
Cellar Door Sales
Facilities on a producers estate or at the winer to sell wine to visitors.
Types of Retailers
Supermarket, Deep Discounter, Convenience Retailer, Hybrids, Online Retailing, Global Travel Retail
Wine Investment Companies
Companies that specialize in sourcing and selling wine for investment. Most focus on investment grade wines that are sought after and expensive such as Borddeaux Premier Crus Classes since they are rare and expensive
Auction Houses
Play an important role in the wine investment market. They often sell overstocked wines and specialize in selling investment grade wines at headline grabbing prices.
Types of Wine Bars
Wine Bar, General Bar
Types of Restaurants
Non-destination Restaurants, Casual Dining, Fine Dining
Monopoly Markets
Government run Monopoly for the retail sale of alchohols. Aim is to limit alchohol consumption. Can keep prices high.
Three Tier System
In the USA was introduced to prevent direct sales from producer/supplier to the retailer to avoid producer monopolies and increased prices. Supplier, Distributor, Retailer are prohibited from cross ownership between most retailers and the upper two tiers. Some states allow producers to sell directly to the consumer.
Open States
States involved in the regulation of the three tier system is relatively minimal. Suppliers and distributors are free to enter into and exit out of agreements tot sell and distribute brands freely.
Control States
States have monopoly over one or more of the three tiers. Generally the only off premise retailer of alchohol is the state itself.
Franchise States
Have strong franchise laws that severely restrict the freedom of supplier to change distributor agreements. In a franchise state, an appointment of a distributor by a supplier is almost considered a lifetime appointment due to the strength of the laws.
Marketing Process Stages
Identify the product, identify the market, set objectives, devise marketing strategy implement and monitor the marketing strategy
PESTEL
When researching the external SWOT analysis (political, economic, social, technology, environment, legal and regulatory)
Product Life Cycle
Introduction, growth, mature decline
Branding
what differentiates wine being a commodity product
What makes brand successful
Substance, consumer trust, consumer engagement, brand story, price premium, longevity
Brand Positioning
Where the brand sits (value, standard, premium, super premium) and the cues used to indicate that position.
Ladder Brand
Helps consumers trade up to higher priced better quality wines. Three ladders tend to be accessible, stretch, aspiration.
Soft Brand
In the wine industry can be a country of origin or a grape variety.
Luxury Brand
Super premium priced wines that only a very few consumers can afford like Champagne prestige.
Segmentation
The division of the market place into distinct subgroups or segments each characterized by a particular tastes and requiring a specific marketing strategy. Segmentation is braised on four sets of variables, demographic, geographic, psychographic, behavioral.
Behavioral and Psychographic Segmentation
Behvarioral and psychographic are somtimes segmented into wine lovers, wine interested, wine curious
Marketing Strategy Broad Options
Undifferentiated or mass, niche, or multiple. Goal is to launch a new product, communicate improvements to existing, increase sales, increase market share, improve brand awareness, improve brand identify, attract new consumers.
Marketing Mix
5 P’s - Price, product, price, people, place, promotion
Types of promotions
Price promotion, discounts, multi buy, link saves, promotion away from POS
